Part 20.
TEXAS WORKFORCE COMMISSION
Chapter 800.
GENERAL ADMINISTRATION
The Texas Workforce Commission (Commission) adopts the repeal of the
following sections of Chapter 800 relating to General Administration:
Subchapter B. Allocations, §800.73 and §800.74
The Commission adopts the following new sections of Chapter 800 relating
to General Administration:
Subchapter B. Allocations, §800.73 and §800.74
The Commission adopts amendments to the following sections of Chapter 800
relating to General Administration:
Subchapter B. Allocations, §§800.52, 800.71, and 800.75
PART I. PURPOSE, BACKGROUND, AND AUTHORITY
PART II. EXPLANATION OF INDIVIDUAL PROVISIONS WITH COMMENTS AND RESPONSES
PART I. PURPOSE, BACKGROUND, AND AUTHORITY
The purpose of the adopted Chapter 800 rule change is to establish an integrated
policy for the deobligation and reallocation of Local Workforce Development
Board (Board) administered funds. This policy will further the Commission's
support of an integrated workforce system and will promote cost benefits through
improved, administrative efficiencies in the local workforce development areas
(workforce areas).
In addition, amendments are adopted to reflect changes pursuant to House
Bill (HB) 2604, enacted by the 79th Texas Legislature, Regular Session (2005),
which directs the transfer of the Disabled Veterans' Outreach Program and
Local Veterans' Employment Representative grant from the Agency to the Texas
Veterans Commission.
The adopted changes fulfill statutory requirements embodied in Texas Labor
Code §301.001, as amended, establishing the Commission to:
(1) operate an integrated workforce development system in this state, in
particular through the consolidation of job training, employment, and employment-related
programs;
(2) standardize, simplify, and make more consistent the procedure of determining
amounts for deobligation and reallocation;
(3) streamline and achieve administrative efficiency and effectiveness
in order to foster the integration of workforce development programs, minimize
administrative burdens and costs, and maximize the proportion of funding available
for services; and
(4) delete various obsolete provisions, add to various provisions to make
references more accurate and complete, and make various technical corrections.
Additionally, Texas Labor Code §302.002 directs the Agency's executive
director to:
(1) consolidate the administrative and programmatic functions of the programs
under the authority of the Commission to achieve efficient and effective delivery
of services; and
(2) contract with the Boards for program planning and service delivery.
Based on the Commission's commitment to an integrated workforce development
system-wherein siloed funding streams and diverse programs are blended into
a functionally unified whole-the Commission requested and received two waivers
from the U.S. Department of Labor (DOL). The purpose of the waivers was to
align the policies for the deobligation and reallocation of Board-administered
funds. By standardizing and making the procedure of deobligation and reallocation
more consistent, the Commission promotes the integration and administration
of workforce development programs.
The waivers allow the Commission to make midyear deobligations and reallocations
in order to better manage workforce funding. Based on the approved waivers,
the rules have been amended to allow deobligations based on an evaluation
of a Board's expenditures, pertinent performance data, and a reasonable cost
per participant in months five through eight of the appropriate program year
for each funding source, and to integrate the processes for the reallocation
of funds. This process is more responsive and allows the Commission to better
address the changing needs of workforce areas. Should any related federal
waivers expire, the Commission will be subject to federal requirements in
effect at that time.
The Commission believes that having its actions clearly delineated in rule
provides the best opportunity for the Boards and the Commission to have a
common understanding of how expenditures and performance are reviewed, and
the impact of the review on potential deobligations. Boards have consistently
performed well, ensuring that services are available throughout their workforce
areas, but at times the expenditures and performance indicate that the formula
for the allocation may be lagging behind current local economic conditions.
The Commission encourages Boards to resize their program and, where appropriate,
make voluntary deobligations.
As noted, Boards' performance has permitted the Commission to minimize
deobligations. Over the past six years, the Commission has deobligated less
than two-thirds of one percent of block grant allocations to workforce areas.
The Commission's record of carefully considered, judicious, and extremely
modest deobligations further serves to promote its guiding principle: the
most successful deobligation policy results in no deobligations, because services
are being provided and funds expended in the workforce area to which they
are allocated.
The Commission embraces this concept and supports Boards in their efforts
to meet employers' needs for qualified workers. The adopted rules establish
clear standards for potential deobligations and reallocations to further foster
ongoing and substantive communications between the Commission in its oversight
role, and the Boards in their role as stewards of the funds. The adopted rule
establishes a common framework for measuring the local service delivery system
against the needs-based formulas established by statute and regulation. Moreover,
the adopted rule provides a significant opportunity for the Boards to offer
information that informs the Commission about any activities or changes in
the local economy that might mitigate a deobligation.
The adopted rules further support the Commission's goal of an integrated
workforce system and allow for increased efficiency in meeting the workforce
development needs of employers and job seekers.
PART II. EXPLANATION OF INDIVIDUAL PROVISIONS
(Note: Minor, nonsubstantive editorial changes are made throughout Subchapter
B of this chapter that do not change the meaning of the rules and, therefore,
are not discussed in the Explanation of Individual Provisions.)
SUBCHAPTER B. ALLOCATIONS
General Comments
Comment: One commenter thanked the Commission for the opportunity to comment
and expressed support of the rule changes.
Response: The Commission appreciates the comment.
§800.52. Definitions
The Commission adopts new §800.52(10), the definition of "relative
proportion of the program year."
§800.71. General Deobligation and Reallocation Provisions
The Commission adopts the amendment of §800.71(b)(7) by removing the
reference to "Veterans' Employment and Training" as a category of funding
to reflect the direction of HB 2604. Therefore, §§800.71(b)(8) -
800.71(b)(10) are renumbered as new §§800.71(b)(7) - 800.71(b)(9),
respectively.
§800.73. Child Care Match Requirements and Deobligation
The Commission adopts the repeal of §800.73, Expenditure, Local Match,
and Obligation Levels, and adopts new §800.73, Child Care Match Requirements
and Deobligation, which delineates the policy to which Boards must adhere
for securing local child care matching funds, as well as the policy for potential
deobligations of federal child care funds that remain unmatched after the
fourth month of the program year.
§800.74. Deobligation of Funds
The Commission adopts the repeal of §800.74 and adopts new §800.74,
which establishes an integrated deobligation policy. Currently, with the exception
of WIA formula allocated funds, funds may be deobligated at the end of the
third and ninth months of the program year. Federal Trade Adjustment Assistance
Act funds have an additional point for deobligation at the sixth month. The
Commission believes the current three-month point for deobligation occurs
too soon during the program year to fully analyze the relationship between
expenditures, service delivery design, and performance-and the ninth month
is too late in the program year to adequately align reallocations, service
delivery design, and enhancements to performance. Therefore, for all Board-administered
funds including WIA formula allocated funds, the Commission adopts the replacement
of the current three-month, six-month, and nine-month deobligation points
with a new midyear deobligation period that begins at the end of the fifth
month and continues through the end of the eighth month in the first year
of funds availability. The adopted deobligation of Board-administered funds,
if applicable, would be based on expenditures, pertinent performance data,
and related cost per participant data occurring during the fifth month and
continuing through the eighth month. For WIA formula funds, the Commission
will review data during the first program year of funds availability in the
appropriate program year.
Comment: One commenter stated that obligations should be considered in
this rule because often training institutions do not submit invoices that
align with benchmarks. The commenter asked how the "cost per participant"
would be determined, whether Boards would be benchmarked against one another,
and how pertinent performance data would be determined. Additionally, the
commenter stated that the "pertinent performance data" and the "related cost
per participant data" is too vague, and stated that the Boards did not have
input into the definition or methodology.
Response: The Commission appreciates that Boards face challenges with
the late billing procedures of many community colleges. The Commission, however,
believes that the rules address these challenges by allowing Boards to offer
supporting documentation-such as information regarding obligations, input
on performance issues, and local policies or anomalies affecting the cost
per participant-prior to any action the Commission might take regarding a
deobligation.
Further, the Commission's intent is not to benchmark one Board against
another. The Commission believes that the rule is clear in its description
of how a reasonable cost per participant is established. The rule sets out
four criteria for determining reasonableness of per participant costs, which
support an understanding of each Board's service delivery system as well as
any recent actions that may affect a Board's formula allocations and relevant
local factors.
Because the rule applies to well-defined funding streams, which include
Child Care, WIA Formula funds, and other Board-contracted funds, the rule
is clear that the review of pertinent or applicable performance is associated
with the funding stream that has failed to meet the expenditure benchmark.
It is the Commission's intent to establish a clear understanding of the
definitions and methodology for the recommendations regarding potential deobligations
of certain funding streams. The Commission further believes that the proposed
rules provided Boards with the greatest opportunity to provide critical information.
Additionally, the adopted rules set forth another deobligation point for
WIA funds at the end of the first year of funds availability if Boards have
not expended 80% of each category of WIA formula funds.
Boards will be notified by the Commission of any potential deobligations
and will be encouraged to voluntarily deobligate any excess funding or provide
justification for projected expenditures, as set forth in the adopted rule.
For Board-administered funds other than WIA formula allocated funds, the
Commission will base a potential deobligation on each Board's expenditure
of an amount equal to 90% of the corresponding proportion of the category
of funds for each of the previous three months. For WIA funds, the Commission
will base a potential deobligation on each Board's expenditure of an amount
equal to 80% of the corresponding proportion of the category of WIA formula
allocated funds for each of the previous three months.
Funds contracted within sixty days prior to a period during which the Board
may be subject to deobligations will not be subject to deobligation.
It is important to note that the Commission currently has established an
incentive for reaching an 80% expenditure benchmark for WIA formula allocated
funds. Boards that reach the 80% expenditure threshold at the end of the first
program year are eligible to receive the Commission's Statewide Activity funds,
some of the most flexible federal dollars available for unique local initiatives.
If a Board fails to meet the 90% or 80% expenditure benchmarks for any
three-month period, the Commission will review a Board's performance for the
appropriate category of funds, and the reasonableness of the cost per participant
for that category of funds. In reviewing a Board's performance, the Commission
will determine whether 95% of the applicable performance measure has been
achieved. Additionally, the Commission will determine whether a Board has
achieved a reasonable cost per participant, based upon the factors set forth
in §800.74(d)(2)(A) - (E).
The adopted rule clarifies that the amount the Commission may deobligate
is no greater than the difference between a Board's actual expenditures as
of the end of the third consecutive month in which a Board has failed, and
the relative proportion of the program year's expected expenditures.
Recognizing that an individual workforce area's service delivery system
presents unique opportunities and challenges, the Commission is permitting
an opportunity for Boards to justify their current and projected expenditure
levels, pertinent performance data, and service levels prior to the Commission's
consideration of a potential deobligation of Board-administered funds, including
WIA formula allocated funds.
§800.75. Reallocation of Funds
Currently, funds administered by the Commission, with the exception of
WIA formula allocated funds, are reallocated to eligible workforce areas based
on criteria in §800.75(a). A separate method for reallocating WIA formula
allocated funds has been employed to address statutory requirements set forth
in WIA §128 and §133. Under WIA, all workforce areas not subject
to a deobligation receive amounts available for reallocation. Unlike other
Board-administered funds, no consideration has been given to a workforce area's
demonstrated need, capacity, or current or past performance.
A waiver granted by the DOL waives federal requirements set forth in WIA §128
and §133 and authorizes the Commission to reallocate recaptured WIA formula
funds to workforce areas using the same procedures and criteria the Commission
employs for other Board-administered funds. The waiver will promote maximum
expenditure of recaptured funds, enabling the Commission to streamline administrative
practices and further enhance the Texas workforce system's effectiveness in
meeting the needs of employers and job seekers.
Therefore, the Commission adopts the amendment of §800.75(a) by including
WIA formula allocated funds. The Commission also adopts the removal of §800.75(a)(2)
and §800.75(b)(3) because these paragraphs are no longer applicable.
The Commission seeks to facilitate the maximum expenditure of deobligated
Board-administered funds through the redistribution of WIA funds to workforce
areas that have achieved not only targeted expenditure levels but also have
met established performance targets. Redistributing funds based solely on
whether a Board achieves its expenditure target does not fully address performance
issues-such as whether the Board has met employers' needs for a highly skilled
and job-ready workforce.
The Commission also adopts the amendment of §800.75(a) and §800.75(b)(1)
by removing the reference to "Veterans' Employment and Training" funds to
reflect the direction of HB 2604. Additionally, the Commission adopts §800.75(b)(1)
to include WIA formula allocated funds.
Effective Date
The Commission adopts that the provisions regarding the deobligation of
WIA formula allocated funds based upon 80% of the relative proportion of the
program year shall be in effect starting with Program Year 2006 funds (beginning
July 1, 2006). The Commission further adopts that the provisions regarding
the deobligation of non-WIA formula allocated funds based upon 90% of the
relative proportion of the program year shall be in effect starting with Program
Year 2007 funds (beginning October 1, 2006).
COMMENTS WERE RECEIVED FROM:
Shawna Chambers, on behalf of Workforce Solutions Brazos Valley
Janie Bates, on behalf of Workforce Texoma
The Agency hereby certifies that the adoption has been reviewed by legal
counsel and found to be within the Agency's legal authority to adopt.
Subchapter B. ALLOCATIONS